Chanos Talks GMCR Short; Steve Kuhn: Bonds Are Talking

Chanos short Green Mountain, long Starbucks

“We are seeing a ton of Green Mountain insiders unloading their stock,” explains Jim Chanos, Kynikos Associates founder & president. He discusses his positions in Sodastream and Starbucks as well.

Transcript:

let’s talk green mountain. i’m not sure people know you are short green mountain. we are. why? we’re also short sodastream. okay. so the reason is, and we’re long starbucks, for example, against it in our hedge fund. basically, green mountain’s core business has been slowing for a while. there’ve been margin issues where coffee prices have offset that. but the core business has been, at this time, slowing. they had to do a transformational deal. they’ve done it. i’m not so sure that cold — the single-serve cold products are the next wave. i mean, i have carbonated single-serve branded cold beverages in my refrigerator in cans. you know, the whole idea of making — it’s not the same as coffee, which is better served fresh. we all know that. but a can of coke lasts for pretty much a long, long time. and so, that market is much smaller than people think. but more importantly, again, like the valeant, we are seeing a ton of green mountain insiders in the last two months unloading stock. the majority of their holdings in many cases. and so, the head of u.s. marketing just sold majority of their stock just this week. so, i mean, again, you don’t have to listen to a short seller. look at the executive suite.

Inside Chanos’ China short

Jim Chanos, Kynikos Associates founder & president, explains why he is no longer long Macau casinos, and short Caterpillar.

Transcript:

you and i discussed monthsago — yeah. — about hugh-end swiss watchsales were coming down.how high-end cognac sales werecoming down, because the chinesebuyer was stepping back.how much of your sotheby’s shortis related to your china call? it’s interesting, becausethe times reported after thebig christie’s sale roughly 30%of the buyers were from asia.and sotheby’s in its 10kindicates that 30% of itsclients are in asia.most of that’s chinese money.now xi xiping are cutting downon corruption.and luxury goods, real estate,one of the reasons it’scollapsed in china this year.the next two will be flightcapital in terms of foreign realestate and art — sotheby’s –and acau. are you shorting — no comment on what we’reshorting in macau.we’re sitting in a casino. yeah, you used to say youwere short china and longcorruption. we were long — we were longcorruption, short property backin 2010-11.we would no longer be long themacau casinos.in fact, i am worried that theu.s. operators are facing realrisk from the corruptioncrackdown that xi is doing, andlast week, kind of unnoticed wasthis union pay crackdown, whichis chinese credit card beingused for money laundering, whereyou swipe your card on thechinese side of the border andyou get cash delivered to thehotels on the other side of theborder.slowly but surely, they’recracking down on this. they handed me a note.they rerented your room fortonight. yeah, i figured.it’s a good thing i have familyin vegas. one more question before wego, related to china, and it’scaterpillar.you’re still short? yeah. why does the stock keep goingup? i don’t know.we keep selling it.i think people are generally ofa belief that this is a northamerican construction play.it’s 15% of their business.itybe ma’s an oil and gas play.you know, caterpillar is a very

Fixed income & equities ‘not talking’: Pro

The hunt for yield is driving the 10-year Treasurys to a 7-month low. Steve Kuhn, Pine River Capital co-CIO, weighs in.

Transcript:

especially on a day when the 10 year is very much in focus. yeah. seven-month low, 2.48. yeah. what are we to make of that? it’s — i think it’s interesting when markets don’t actually talk to each other. and today, i think if you look at the fixed income market versus the equity market, it’s as if they live in two different worlds. the 10-year treasury with a yield below 2.50, you could put that into stocks and say it’s trading within a p/e of 40. that’s a little too low. look at low. the contrast is we love stocks that are incredibly boring. i can give you portfolio stocks where the earnings are so stable they might as well be bonds that have pe of 12-14. compare that to the 10 year treasury of pe of 40 and i think you will win on that trade the vast majority of time. you might lose in a week or month or year but not over five or ten years. those stocks will outperform. the environment you’re suggesting is it’s back to looking for equities that basically look like bonds. yeah. do you think 3-6 months out that continues, but it’s going to three. if you’re going to substitute bonds for equities, that’s a great reason to do that. you really don’t want to be in bonds if you don’t think the 10 year yield will go up. usually people ha 60/40 mix of stocks and bonds. you argue bonds themselves provided stability, low volatility. stocks more volatility, you get a higher return. put that mix and you have a stable portfolio. i think the contrast to chat you could do instead is buy a to tilt of lowest vol stocks and have higher returns and replace

Pro loves ConAgra, AGCO & more

you say con ag is one of the most boring stock i can imagine and i love it. i love it. it fits the profile of the stocks i love. various different brands. most not the top brands, second tier brands. the earnings in this company couldn’t be more stable. you’re basically getting a bond-like return with yield closer to 8%, 12 pe versus yield of 8%. that’s fantastic. talk us to about rock ten. rkt is the ticker symbol for all of you playing at home or wherever you are this hour in this country. rock 10 international paper, that whole sector, google won’t be making paper cups, not a sector of the market you’re worried about technology change. they do paper cups and not going anywhere, a 10 or 11 pe. the last boring name is adco. the reason i’m interested in that, the weakness in south america and aging markets, that might go to the down cyred. do you still hold on to that? you talk about the weakness. emerging markets is bigger growth. 75% of earnings come out of north america. they are leaders in global satellites to make higher agricultural yields. that is going to be in demand a long time. they have stable brands, incredibly boring, low pe. much better to own that than treasury at 2.5%.